Editorial: Reset extractive sector management for better equity

The Institute for Fiscal Studies (IFS) is calling for a radical management overhaul in the nation’s extractive sector, emphasising a need for production sharing agreements in response to persistent state revenue shortfalls.

In fact, IFS believes that government’s latest fiscal strategy is unlikely to deliver the funds needed to finance its development agenda.

In an assessment of the 2025 mid-year budget review, the think-tank said the country should abandon its concession regime that allows foreign firms to dominate mineral and oil production at the expense of state revenue.

Leslie Dwight Mensah, a research fellow at IFS, is adamant that a reset is needed and should begin with the extractive sector.

IFS argues that Ghana’s reliance on concessions has limited fiscal returns from its gold and oil resources, leaving the state dependent on borrowing and tax hikes which strain businesses and households alike.

By contrast, production sharing agreements – used in countries such as Botswana and several Gulf states – ensure governments capture a larger portion of resource rents.

Indeed, Ghana’s development prospects hinge on capturing greater value from its mineral and petroleum wealth rather than continuing to rely on taxes and external debt.

The IFS critique comes as Ghana’s revenue performance continues to lag behind expectations. Government receipts and grants fell short of target by GH¢3.24billion (US$210million) in first-half 2025, with oil revenue alone underperforming by more than 40 percent.

The shortfall forced deep cuts in capital spending, derailing government’s ‘Big Push’ infrastructure agenda. Despite these gaps, government maintained its original full-year projections in the revised 2025 budget – apart from an adjustment for higher energy levies.

IFS said the unchanged targets are unrealistic, given the weak outturns in first half of the year.

Lastly, the think-tank also cautioned against a hasty return to international capital markets to plug financing holes, arguing that fresh borrowing would quickly undo progress from recent debt restructuring. Ghana’s debt service costs already consume a significant share of public revenues.

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